According to a recent review of energy and natural resources (ENR) data collected by the economist intelligence unit of KPMG’s global ENR practice, today’s ENR organisations may be unprepared to meet the ever-growing array of risks now present in the market.
The report, entitled No paper chase: transforming risk management at energy and natural resources companies, found that while risk management continues to be a high priority for ENR executives and boards, the management of these risks is not advancing as fast as the threats that they face and companies are, therefore, at risk of falling short in important areas.
The data shows that ENR organisations are already starting to lag behind. Less than two thirds of respondents said that they ‘often’ or ‘constantly’ build risk management into their strategic planning decisions, while only 14 per cent of respondents said they had a formal risk appetite statement; almost half admitted to not doing an annual bottom-up risk assessment and more than one third said that their risk management function relies on a self-assessment from the business units, rather than a centralised risk function.
Michael Wilson, KPMG UK partner, said: ‘ENR companies are at an inflection point in their risk management efforts.
‘This data clearly shows that today’s ENR organisations urgently need to return to the basics and reconsider what they expect to achieve through their risk programmes if they hope to keep up with the rapidly changing risk environment in which they now operate.’